By  on October 8, 2007

WASHINGTON — U.S. apparel and textile manufacturers deepened their slump in September, cutting 5,500 seasonally adjusted jobs from payrolls, as overall job growth for the month and an upward revision in August employment reassured Wall Street that the economy still has some steam.

In the retail sector, specialty stores boosted payrolls, and the consolidating department stores segment continued to trim its workforce, the Department of Labor reported on Friday.

U.S. employers added 110,000 jobs to payrolls in September, almost in line with Wall Street's expectations. The gain was combined with a revised August report that showed a net increase of 89,000 jobs, removing what had been the first monthly drop — 4,000 jobs — in four years, which stoked concerns about a recession. The stock market rallied behind the improving employment picture Friday. The Dow Jones Industrial Average rose 0.66 percent to 14,066.01, the Standard & Poor's Index gained 0.95 percent to 1,557.53 and the Nasdaq was up 1.7 percent to 2,780.32.

The only downside in the overall employment picture, aside from continued weakness in the manufacturing sector, was an increase in the overall unemployment rate to 4.7 percent from 4.6 percent.

In an effort to boost confidence after the government's initial job loss estimate in August, the Federal Reserve Board cut its benchmark federal funds interest last month by half a percentage point to 4.75 percent, marking the first rate reduction in more than four years. The move was intended to stimulate economic growth by increasing access to credit for businesses.

Despite the stronger employment news, the impact of the credit squeeze on Wall Street and the worst housing slump in 16 years — spurred by the crisis in the subprime mortgage market — has clouded the economic outlook, economists said.

"Even with the revisions, the evidence of a slowdown in the labor market remains clear," Nigel Gault, Global Insight's chief U.S. economist, wrote in a report. "The areas we would expect to be weak due to the housing downturn — construction, credit intermediation — are shedding jobs," along with the manufacturing sector.

"Our underlying view of the economy remains unchanged," Gault wrote. "Output growth is slowing, employment growth is slowing and the Fed will need to cut interest rates further."Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University, said the job growth in the past few months has not kept pace with the average employment growth in the previous six months. Dhawan said the 12-month annual is 135,000 jobs, which is 30 percent more than the average of 97,000 in the past three months.

"The economy is definitely slowing," Dhawan said. "The credit-crunch effect will really come out in the data in the next few months."

The manufacturing sector has been losing jobs for years and the situation has only worsened within apparel and textiles. Suffering attrition because of foreign competition and low-cost imports, U.S. textile mills cut a seasonally adjusted 2,600 jobs last month compared with August to a total of 164,900. Textile product mills employment fell by 900 jobs to 152,000. U.S. apparel factories cut a seasonally adjusted 2,000 jobs, to 212,200.

In the past 12 months, textile mills employment dropped by 23,100, textile product mills employment declined by 7,900 and apparel employment fell by 22,600.

Last month, apparel and accessories stores added a seasonally adjusted 100 jobs compared with August, for a total of 1.45 million. Department stores, however, trimmed 1,000 jobs from payrolls, to 1.55 million.

Economists predict the credit crunch and unstable labor market will reduce consumers' purchasing power as retailers head into the holiday season.

"When the economy is not growing or they are getting laid off, they get a little skittish about spending money," Dhawan said.

A downturn in consumer spending could be offset by a decline in oil prices and a boost in wages, he said.

Consumers and retailers received good news in September as average hourly earnings rose 0.4 percent to $17.57 compared with August. Still, Dhawan said he does not expect the holiday season to be as good for retailers as it was last year.

"People will still buy, but they will continue to economize," he said.

To Read the Full Article
SUBSCRIBE NOW

Tap into our Global Network

Of Industry Leaders and Designers

load comments
blog comments powered by Disqus